Pressure mounts on RBI to cut rate to boost growth

With moderation in economy and core inflation, pressure is mounting on Reserve Bank to cut interest rate by up to 0.50 per cent and address liquidity concerns to boost growth.

While the Finance Minister P Chidambaram expressed hope that RBI would address liquidity issues at its mid-quarterly review tomorrow, SBI Chairman Pratip Chaudhuri said a 0.50 per cent interest rate cut is needed.

"I think Governor is also aware of the issues about liquidity and tomorrow is the monetary policy. I am sure he will address the issue of liquidity," Chidambaram said after meeting the chiefs of PSU banks in New Delhi.

The Minister said many PSU banks are having SLR in excess of statutory requirement of 23 per cent and earning interest on them rather than lending to corporates.

Chaudhuri said: "We have requested 50 basis points in CRR and 0.50

per cent cut in Repo. We have also requested to increase the export credit refinance which is currently 50 per cent of the rupee credit. We have requested them to increase it to 100 per cent.”